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Comment: Top-Down Class Warfare

It is difficult for a liberal to raise concerns about irresponsible corporations without being accused of class warfare. The Wall Street Journal recently ridiculed Al Gore for "schlock populism" and cynical "business-bashing."

In truth Gore's criticism is carefully calibrated and directed against assaults that affect the broad middle class. The vice president goes after drug companies for price-gouging, managed care companies for second-guessing doctors, tobacco companies for marketing products to kids, and Hollywood for purveying violence. Most voters agree with Gore. But the vice president hasn't attacked corporations in general. Nor has he addressed America's gross disparities of income and wealth, or the fact that tens of millions of full-time jobs fail to pay a living wage, or the abuses of welfare reform. That brand of class politics takes exceptional political courage because most of America considers itself middle class.

The real class warfare in America today is top-down, as it has been ever since Ronald Reagan. The proposed Bush tax cut, which would bestow 43 percent of the money on the top 1 percent of earners [see Robert McIntyre, "Tax Wars," page 23] is just the beginning. The general conservative assault on social endeavor is occasionally principled and libertarian, but can be usefully understood in terms of class.

The rich don't need government because they can simply opt out--to private schools, exclusive clubs, gated communities, personal physicians, nannies, limousines, and helicopters. The rest of us depend on basic public services and social infrastructure. Starve Medicare, and you ration health care for those with a limited ability to pay. Cut federal help to schools, and you deny upward mobility to the children of the nonrich. Refuse to address the job-family straddle faced by working parents, and you assault every child whose parents cannot afford expensive private day care. That's class warfare, big-time.

Collective purpose is not just about social investment. Deregulation has been a back-door form of class warfare. A generation ago, industries such as airlines, electric power generation, trucking, telephone service, hospitals, and banks were all government-regulated. Supposedly, deregulation would help consumers, but its practical effect has been a mixed bag. Airline fares have come down on average (along with service), but prices today are a crazy quilt, and average prices actually fell at a faster rate before deregulation. The whole airline system is now a mess. Likewise, electric power. Ditto banks. Ditto telephones. Verizon recently advertised that it is now possible to have your local and long-distance service conveniently provided by the same carrier. Imagine, one phone company! What will the free market dream up next?

But if it's a mixed blessing for consumers, deregulation has been devastating for blue-collar workers. The old regulated phone company had a social compact with its workers. Regulation guaranteed stable (but not excessive) profits. This climate, in turn, allowed gains of productivity to be shared with workers. The old AT&T accepted its unions, and its employees delivered a high quality of service to consumers.

With deregulation the cutthroat battle for market share is often waged via steady erosions in pay, working conditions, and job security. Union workers with decent incomes are played off against casual labor. Consumers also suffer. If you wonder why some telephone operators sound barely literate, consider that many are nonunion workers who make as little as $6 an hour, and that turnover is high. The recent Verizon strike was not primarily about pay scales but about job speedup and the company's war on unions. The Communications Workers of America and the International Brotherhood of Electrical Workers won a significant victory, which will help them organize nonunion parts of the company.

What is true of telecommunications is also true of the airlines, hospitals and nursing homes, trucking companies, and public utilities. Deregulation guts good jobs. The blue-collar middle class, once the pride of America, is becoming an endangered species.

Deregulation of global commerce is also a form of class warfare. It puts pressure on rich and poor nations to shred their social safety nets in order to reassure investors and bankers. It pits modestly well-paid industrial workers in the North against desperate ones in the developing South rather than forging a common strategy that applies basic rules of decent conduct to all capital investment flows.

Lamentably, many Democrats as well as Republicans embrace the formula. You don't hear much about this form of class warfare because it is never advertised as such. Rather, the rhetoric is one of general efficiency: Shrink government, lower taxes, get rid of regulation, liberate capital--and the economy will soar. "Everyone" will benefit. But the past decade has conclusively demonstrated that everyone doesn't benefit.

I began by observing that it is hard for American politicians to address the plight of the poor in a largely middle-class country. The one proven way to join the interests of middle-class and poor families is through universal government programs and through regulation that protects the entire citizenry. But discredit government, and you sever that alliance. So class warfare from the top not only harms the economic security of ordinary people; it wrecks progressive coalition politics.

Maybe it's not so bad to be accused of class warfare. Class is the great unmentionable in America. If it can finally be spoken of, we may appreciate that only a small minority really benefits from top-down class politics--and the rest of us have more votes. ¤